Monday, April 30, 2012

Million Dollar Listing New York

As always, I’m attracted to yet another Bravo series – Million Dollar Listing New York is in its first season.This is the second of a Bravo franchise – the
first originated in Los Angeles.I watch
for a few reasons-- I like the premise,
I like decadence and I really love real estate.

Hand Model, Rich Kid, Porn Star

The premise of this show (and the franchise)
is following young realtors and their very expensive house listings.The show has only showcased young, male
realtors so far.In New York, we follow
three guys – Fredrik, Ryan and Michael.Fredrik is gay and a former porn star; Ryan is a former actor/hand model
and Michael is just super wealthy thanks to a successful father.They sell real estate in Manhattan, some of
the most expensive property in the world.

I am in the process of selling my home as
I’ve purchased a new one.I thought I
would take this opportunity to showcase the pro’s and con’s of learning about
real life from a reality show.Full
disclosure, this is my third home purchase and I have a real estate license, so
I’m not 100% stupid on the topic.

What to glean from Million Dollar Listing if
you’re looking to buy or sell:

You really should listen to the
agent regarding listing price.The show
highlights numerous buyers wanting more than what the agent first
recommends.While it appears the agents
are greedy (and they kind of are), they really do know what the market will
bear.It’s their job to run comps and
they know what is selling and for how much.

Just because you think it’s great
or special, doesn’t mean the buyer will have the same emotions.Again, goes to what the market will
bear.If you put a ton of special
features into a home, doesn’t mean you will get all of that investment back.If you want your home a certain way, realize
you’re spending the money for your comfort, and not necessarily for investment.

If you have a low ball offer from
a buyer, don’t get mad at the agent for presenting it…they have to.It’s their fiduciary responsibility to
disclose all offers, ever if they are slightly insulting.That’s why you see scenes where agents get
annoyed and dramatic with each other, it’s part of the dance.

Staging matters.If you are like me, you look at the bones of
the house to see if it works.Sadly,
many buyers are into cosmetics and don’t always have a vision.There are dozens of reality shows revolving
around staging and home decorating and while most of the homes in this show are
gorgeous, they still have to deal with clutter and décor.

These guys are cut throat when
trying to get a listing.If they appear
to jump through hoops, it’s a good thing.You want an agent who will be honest with you and work hard for the
sell.In other words, if the agent is
hungry (even greedy), they should work harder on selling your home.

What not to absorb:

In the Midwest, I’ve never
encountered some of the outrageous broker listings.While the properties in Manhattan are
stunning, most of us need to clean, declutter and just simple prepare to have
the house listed.Realtors will invite
brokers, but for normal folk, it’s work just making the place look nice for the
MLS photos.

Offers and counters.On these shows, you’ll see two brokers
exchanging offers with calls to the client.We can see a deal close within 12 minutes of programming.For my experience (and probably everyone
else), a written offer is sent to your agent.Your agent then calls you to discuss.You then decide to accept or counter and more paperwork ensues.Even then, you give people a certain amount
of time to response.In other words, it
takes longer than 12 minutes and there’s lots of signing of paperwork.

You don’t see earnest money
exchanges on this show.Real Estate is
different in each state, but typically when you write an offer on a house, you
need to give a check – earnest money, which then goes into escrow.It’s basically saying you are for real and
mean business.The amount of earnest
money is typically dictated by the price of the purchase. I recently wrote a
$2000 check…not a lot, but in Indiana, you need to have some liquid dollars for
this.

You also don’t see home
inspections and loan financing on this show.I guess we are to assume all buyers and sellers are flush and it’s too
boring to go into these details.However,
in our current economy, it’s not as easy to buy a house for normal people.Our economy crashed in 2008, largely in part
to the housing market and people not being able to fulfill their mortgage
commitments.Lenders were too lax,
sellers were too grandiose and the American Dream included home ownership.In other words, people borrowed more than
they could chew in a housing market bubble.

It’s totally fun to see the personalities on
this show and imagine how much money they are making.At the same time, we get to see amazing New
York properties.When we watch, we need
to remember this is not the reality for most of us.The American Dream is shifting, or it
should.Folks need to have some cash in
the bank and good credit and a desire to own a home…it’s no longer an
entitlement.Renting should not be
shameful for our fellow citizens.Property values and tax revenues are vital to local economies, but we
also need our neighbors to work, pay bills and not be overwhelmed with all that
comes with home ownership.

I’ve done something I would NEVER
recommend…buy without selling my current property.I am doing this because I’ve done the math
and know I can swing both.This is not
bragging as both investments are humble.Here are my tips for home ownership:

Don’t buy until you can sell or
can afford both

Don’t buy unless you have cash
for a down payment which will cover mortgage insurance – typically 20% down.

As Suze Orman says, have an 8
month emergency fund, even after you’ve put 20% down. If you have a duel income home,
don’t max out your debt.In other words,
make sure one salary will cover your expenses in the event one person loses
income.

If you buy an older home, pay
attention to the bones of the house, not the paint colors.Paint is cheap, but new roofs, windows and
plumbing are expensive.

Pay attention to the neighborhood
and schools.Even though I don’t have
kids, I care about the school options (when you want to sell).

If you don’t like maintaining
things – yards, home improvements, etc., make sure you’re not putting too much pressure
on yourself.If you don’t like it now,
you won’t like it once you move in.

Don’t be greedy when selling and
listen to your agent. The longer the
house is on the market, the more people will question why.

Even though you list and know you’ll
negotiate, consider the expenses that come with an inspection report.You need to build all of this into your
budget.Once the inspection comes back,
you may have to fix things or offer money, so be prepared.

and jackets

Plainly stated, buying a house is a big deal
for people.When you watch the show, we
see folks grumbling over millions or hundreds of thousands.If you can remove some zeros, we’re all the
same.While our agents may not look like
models or appear to be sharks, it’s important to work with trustworthy, hard
working agents.Even if they are
friends, it’s business, so stay focused and try remove the emotion.And when you do get stressed, watch Bravo
shows for escape!